Introductory Game Theory
Winter Term, 2016


Welcome to the Economics 171  Website. Here you will find the course syllabus, a schedule of lessons, homework and examinations, and some bits of advice. Students in this class  will be expected to check this site regularly.  I  will routinely use this site for posting announcements and homework assignments.
 

 

Instructor:          Ted Bergstrom 

Office:  North Hall 2052 

Office Hours:   Wednesday, 2-3:25

Email: tedb@econ.ucsb.edu

Course Introduction

Game theory is the study of the interaction of rational decision makers.  This theory has become a fundamental tool in the study of social interaction in economics, political science, anthropology, sociology,  animal behavior, biology, computer science and other disciplines.  In this course we introduce basic concepts of game theory and explore a variety of applications.

Is this the course for you?

If you are looking for an easy course and generous grades for  low performance, this is not the course for you.  There is regular assigned reading and  homework and frequent  unannounced in-class quizzes.  You will be expected to come to class and to have done the assigned reading before you come to class.  I will use clickers to record attendance  and will call on people regularly.  I do not hesitate to give failing grades to those who show no evidence of having learned the course material.

If you are intellectually curious and  are willing and able to put in the effort to read the assigned material,  work the assigned homework problems, and show up in class having done your assignments, I think that you will find the course stimulating and enjoyable.  

Necessary equipment

The main study resource for this course is the textbook is Games, Strategies, and Decision Making, Second Edition  by Joseph E. Harrington, Jr.   I urge you to get a copy.   This is not one of those courses where you can get by without reading the textbook.  
We will be using it intensively and regularly for readings and assignments.    For those who haven't yet got your copies of the text, I have made and posted pdf copies of Harrington's  Chapter 2  at this link    and Chapter 3 at this link.   Backorders are sometimes slow to arrive at the bookstore, so here is Chapter 4 and the Chapter 4 check-your-understanding answers.   This is the last chapter that I can post without running afoul of the copyright police.  There are two copies  of Harrington on reserve at the library.   

You will be required to bring an  i>clicker to class.  If you don't already have one, they are available for purchase at the campus bookstore.   If you haven't already done so, you will need to register your i>clicker at the following website.  www.i>clicker.com/registration.  
 
Basis for grades
The weights that I will assign in determining your course grade are as follows. 
I will drop everyone's lowest homework score when calculating course grades.

Homework, in-class quizzes, and clicker scores, 20%
Each midterm will count for 20% of your grade
Final Exam will count for 40%.

Announcements:

This course now has a GauchoSpace page. Eventually we will put copies of all course materials up there, but for now we will still use the course web page.
But we do need to use GauchoSpace to register clickers.    If you have not previously registered your clicker number with GauchoSpace, you should do so now.
Just go to the GauchoSpace for Econ 171, find the Register my clicker tab on the lower left side of the page and register your clicker.

You can find the distribution of scores and grades for the first midterm on the first slide of Lecture 7.  Answers are posted at this link.

Copies of the second midterm with and without answers are now available at the GauchoSpace page for this class.

Schedule of Assignments

You will be expected to do the assigned readings BEFORE you come to class.  In the lectures,
and discussions, I will assume that you have done this readings. and there will be clicker questions
based on your reading of the assigned chapter.   (You should keep this in mind when deciding whether
this is the class for you.)

 Homework assignments are to be handed in at the beginning of class on the day that
they are due.

The schedule you see here is an approximate forecast,  like the weather report,  and will  become more detailed and more accurate
as the scheduled week approaches.

Week 1
 

January 5 and  7
Readings:  Before Class meets on Thursday, read Harrington: Chapters 1 and 2.
A pdf copy of Chapter 2 can be found at this link. 
As you read, do the "Check Your Understanding Exercises."   Answers to these are found in the back of the book.  You do not need to turn these in, but you should do them.
Homework: Due January 7:  problems 1, 3, 8, and 9  of Chapter 2.  (Hint:  When working problems 8 and 9, I advise you to read section 2.4 "What is a Strategy" very carefully.)


Week 2

Readings:
  Tuesday, Jan 12   Harrington  Chapter 3,
A pdf copy of Chapter 3 can be found at this link.
Read The Purloined Letter by Edgar Allan Poe.  A copy is available at this link.  (Be able to describe the game played by  the eight-year-old marble player.  What do you think of his strategy?)
Thursday, Jan 14,   Harrington Chapter 4, first part 
A pdf of chapter 4 Check your understanding is here.
 
Homework:
due  Tuesday Jan 12: problems   6,   11, 12 and 14  Chapter 2. Problems 12 and 14 are not in the first edition of the book and also not at the link for reading chapter 2.
I have copied them to
this link
due Thursday Jan 14:  problems 1, 4, 5, and 8   Chapter 3                                                                                                                                                                                                                                                          
 
Week 3

Readings:
  Tuesday, Jan 19 Finish  Harrington  Chapter 4
Thursday Jan 21  Read Harrington Chapter 5
Homework:  Due Tuesday Jan 21,  Problems 10 and 15 from Chapter 3,  Problems 1,2,3, and 4 from Chapter 4

Due Thursday, Jan 21-  Problems 8, and 15  from Chapter 4. (NOTE:  There is a typo in Problem 8 of Chap 4.  The current version says "the SULTAN's bid must be an even number between 2 and 10."   That should say "the SHEIK's bid" must be an even number between 2 and 10.")

 Problems 1, 3 and 5 of Chapter 5 
 


Week 4

First Midterm:  Tuesday Jan 26.    Midterm covers Chapters  2-5
 
No calculators, cell  phones, or notes may be used during the exam.
You don't need to bring bluebooks or scantrons.  Your answers can be written directly on the exam.



  Readings:  Thursday, Jan 28, Read Harrington Chapter 7.
Homework:  Due Thursday:Jan 29  Problems 1, 2, 3 and 4, Chapter 7
Here you will find the Chapter 7 problems from the second edition.


Week 5

  Readings: Tuesday, Feb 2 (Groundhog's Day),  Start Harrington,  Chapter 8
Homework Feb 2: Chapter 7,  Problems 6, 7, 11, and 20 
Readings: Thursday, Feb 4, Finish Chapter 8,
Homework due Feb 4: Problems 1,3,4, and 8 Chapter 8
Here are the Chapter 8 problems  from the second edition


Week 6

Homework due Feb 9:  Problems 10, 11, 14, and 16 from Chapter 8
Readings:
  Tuesday Feb 9  Start Harrington,  Chapter 9
Some time before the next midterm,
read Edgar Alan Poe's short story, The Purloined letter
I have  put a Chinese translation of this story in the Readings folder on GauchoSpace.
If you read it earlier, look at it again.  Now that you have studied mixed
strategy equilibrium, here are some questions to think about:  Use a strategic form payoff matrix to
describe the marble game that the boy played.  What is a Nash equilibrium for this game?  Does this  boy
use a Nash equilibrium strategy?   How does the story of this game relate
to the main story of the Purloined Letter?  

Readings:  Thursday, Feb 11 Finish Chapter 9
Homework due Feb 11:  Problems 1,2, 3 from Chapter 9

Here are the Chapter 9 problems from second edition

Week 7


Homework due Feb 16: Problems 10, 17, and 20  from Chapter 9

Midterm on February 18
Midterm covers Chapters  2-5 and 7-9.   
 
No calculators, cell  phones, or notes may be used during the exam.
You don't need to bring bluebooks or scantrons.  Your answers can be written directly on the exam.


Week 8

Readings :   Tuesday, Feb 23 
Chapter 10, Sections 10.1-10.3.  Try to work Problems 10.1 and 10.2.  You don't need to turn these in.
Readings :   Thursday, Feb 25   Finish reading Chapter 10, including the Appendix. 
Homework due Feb 25, Problems 3,4,5 and 7 Chapter 10.

Here are the Chapter 10 problems from the second edition.

Week 9
Readings: Tuesday, March 1:  Read Chapter 11  on Signaling.  (Section 11.4 is optional)
Also Read:
This article is written by oil industry analysts, who describe the winners' curse in clear simple terms.  I recommend that everyone read the first three pages and the conclusion of this paper.  If you get interested, you can read more.
Homework due Tuesday, Problems 1 and 3, Chapter 11
Homework for Thursday, Problems 5 and 6, Chapter 11

Week 10
Readings Tuesday, March 8.  Read Chapter 12 on Cheap Talk.

Lecture Notes

I will post PowerPoint slides form the lectures after the class meets.
   These are far from complete, because we also use the blackboard and oral discussion.  
They certainly  do not serve as a substitute for reading the textbook.   



Introductory lecture

Lecture 2 (Extensive and Strategic form representations)
Lecture 3 (Dominant Strategies)
Lecture 4 (Nash Equilibrium)
Lecture 5 (N-player games)
Lecture 6 (Some Problems solved)
Lecture 7 (Mixed Strategies)

Lecture 8 (More on mixed strategies)
Lecture 9 (Subgame Perfection)
Lecture 10 (Playing in the Dark)
Lecture 11 (Problems in the Dark)
Lecture 12 (More Problems)
Lecture 13 (Bayes-Nash)
Lecture 14 (Bayes-Nash and auctions)
Lecture 15(Signaling)

Lecture 16 (Signaling Problems)
Lecture 17(Cheap Talk)
Some Cheap Talk Problems
 



Exams from 2014

Midterm 2014  
Note: This midterm was offered after we had studied mixed strategies in Chap 7.  Mixed strategies won't be covered in the 2016 first midterm.
Midterm with Answers



Last Year's Exams

First Midterm

Answers to First Midterm

Second Midterm

Note:  Last year's midterm took place after class had read Chapter 10 on Bayes-Nash equilibrium.  Questions 4 and 6  assumed that students had read that chapter.
This year's midterm will not include questions requiring knowledge of Chapter 10.

Answers to Second Midterm

Final Exam

Question 8 of last year's exam is based on material found in chapters 13 and 14, which we didn't cover this year.  Questions asked in this exam
will assume only that you have studied chapters 1-12.

Answers to Final Exam